* Joint venture to produce 1,500 tonnes a year
* Focus on heavy rare earths, Japanese market
* Aims to reduce dependence on China
By Robin Paxton
ALMATY, Nov 2 Kazakhstan's state nuclear company
and Japanese trading house Sumitomo Corp opened a new
plant on Friday to produce rare earth metals coveted by
technology companies ke e n to break China's stranglehold on
Summit Atom Rare Earth Co, a joint venture between
Kazatomprom and Sumitomo, will produce 1,500 tonnes a year of
rare earth oxides at a $30 million plant in the north of the
Central Asian republic. Japan will be its biggest market.
Japanese and Western consumers have accelerated the search
for alternative supplies since China, which produces over 90
percent of the world's rare earths, said it could sharply reduce
The 17 rare earth elements have a wide range of
applications, from smartphones and hybrid cars to glass
polishing, luminescent materials, hydrogen storage cells and
powerful industrial magnets.
Located in Stepnogorsk, near the capital Astana, the new
plant intends to double annual production capacity to 3,000
tonnes by 2015, Kazatomprom said in a statement.
By 2017, it would be capable of producing between 5,000 and
6,000 tonnes per year of rare earth oxides, it said.
Chinese export curbs announced in 2010, which Beijing said
were needed to prevent reckless exploitation of its reserves,
prompted a rapid spike in prices last year and led consumer
countries to file a complaint with the World Trade Organisation.
Prices have since retreated, however, as hot money departed
the illiquid sector. Slower economic growth in China, which is
also the world's largest consumer of rare earths and may itself
become a net importer by 2014, also contributed to the retreat.
China announced a 2.7 percent increase in annual export
quotas in August, the first rise in five years.
The Kazakh plant will concentrate on production of heavy
rare earth elements, especially dysprosium and other metals used
in magnets and electric car motors. Heavy rare earths are much
scarcer than their light cousins, such as cerium and lanthanum.
Japan's Yomiuri newspaper, citing unidentified government
sources, reported on Friday that Japan could begin importing
rare earths from Kazakhstan as early as January.
Initial production of 1,500 tonnes a year at the plant would
be equivalent to about 7.5 percent of Japan's annual demand, the
Yomiuri said. It said imports from Kazakhstan would include 20
tonnes a year of dysprosium, or 3 percent of Japanese demand.
Kazatomprom said in the statement that the joint venture had
signed sales contracts with Sumitomo Corp and two other
companies, Japan's Shin-Etsu Chemical Co and French
chemicals group Rhodia.
Kazatomprom has previously said the Summit Atom joint
venture would process tailings from a disused plant in the
western Kazakh city of Aktau. Future cooperation could include
exploration for new ore resources.
Kazatomprom owns 51 percent and Sumitomo Corp 49 percent of
the joint venture.
(Editing by Mark Trevelyan)